U.S. equity markets posted modest yet steady gains in August 2025 as investor optimism surrounding potential interest rate cuts and resilient corporate earnings helped counter persistent inflation and tariff-related apprehensions. The S&P 500 recorded monthly gains of 2.2%, extending its winning streak to the fourth month. 

In August, market gains were driven by AI momentum, digital advertising strength and Fed rate cut optimism. As such, the Financial Services sector witnessed solid investor optimism. The KBW Nasdaq Bank Index and S&P Banks Select Industry Index were up 5.5% and 8.3%, respectively.

While the Financial Services sector comprises several big names, today let’s focus on the three best-performing stocks – Assurant, Inc. (AIZ Quick QuoteAIZ - Free Report) , Synchrony Financial (SYF Quick QuoteSYF - Free Report) , American Express Company (AXP Quick QuoteAXP - Free Report) , Fifth Third Bancorp (FITB Quick QuoteFITB - Free Report) and Citizens Financial Group, Inc. (CFG Quick QuoteCFG - Free Report) . These stocks have also outperformed the S&P 500 Index and the Zacks Finance sector.

August Price Performance
 

Image Source: Zacks Investment Research

Before discussing these financial services stocks in detail, let’s check out the reasons for investors’ bullish stance on the sector.

In August, the Financial Services sector gained momentum as investors priced in a growing likelihood of a September Fed rate cut, boosting confidence in rate-sensitive banks and insurers. Stable consumer and corporate credit trends further supported the sector by easing concerns over asset quality. 

Also, stronger-than-expected earnings reports and upbeat guidance from major financial institutions added to the positive sentiment. Meanwhile, a rebound in capital markets activity, alongside a constructive regulatory and policy backdrop, helped diversify revenue streams and sustain investor interest across the group.

5 Best Financial Services Stocks to Keep on Your Radar

Assurant’s focus on growing fee-based capital-light businesses, which account for 52% of segmental revenues, bodes well for growth. Management estimates that the contribution from this will continue to grow at a double-digit rate over the long term. 

Within Connected Living, AIZ continues to support long-term growth by developing innovative offerings for its partners. U.S. Connected Living is poised for solid growth, particularly within the mobile protection business, thanks to innovative offerings, customer experience expertise and improved relationships with mobile carriers and cable operators.  

Homeowners’ top-line growth, more favorable loss experience from prior-period development on claims, growth in policies in-force and higher average premiums within lender-placed, as well as growth across various specialty products, should drive better results at Global Housing. For 2025, AIZ expects Global Housing adjusted EBITDA, excluding reportable catastrophes, to deliver strong growth.

Global Lifestyle growth is expected to be driven by Connected Living, fueled by growth in global mobile device protection and a new financial services program, as well as inorganic and organic growth strategies. For 2025, Assurant expects adjusted EBITDA in this segment to increase from growth in Connected Living and Global Automotive. 

The insurer remains focused on ramping up the Connected Living platform, deploying innovative products and services, and adding new partnerships. The company projects these initiatives to double Connected Living's margins to 8% over the long term.

Currently, AIZ sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Synchrony Financial stands out by leveraging its strong distribution channel to offer a broad range of products, including private-label credit cards and dual Cards for use on MasterCard and Visa networks. It has the potential to issue dual cards for use on the American Express and Discover networks, contributing to a more profitable and resilient business model. 

Further, Synchrony Financial has fueled growth through acquisitions and partnerships that expand digital capabilities and diversify offerings. Notably, it acquired Ally Lending and Allegro Credit, boosting point-of-sale, audiology and dental financing. Collaborations with PayPal, Venmo, LG, Mastercard and retailers like Ashley and American Eagle modernized payments and broadened e-commerce reach, while a Walmart partnership introduced an embedded credit card program for U.S. shoppers.

The company’s revenues witnessed a five-year CAGR of 2.6% (ended 2024). The trend reversed in the first six months of 2025 on a year-over-year basis. SYF anticipates net revenues to be in the range of $15-$15.3 billion for 2025, down from the earlier guidance of $15.2-$15.7 billion. This downward revision is on account of higher Retailer Share Arrangements or RSA and lower loan receivables.

Also, despite financial strength, Synchrony Financial’s business model exposes it to credit risk, which adversely impacts its credit quality due to a higher allowance for loan loss, especially in an economy grappling with inflationary pressures and higher-than-normal interest rates. The lingering macroeconomic headwinds and tariff uncertainties are expected to weigh on its financials to some extent.

Currently, SYF carries a Zacks Rank of 3 (Hold).

American Express stands out by leveraging its unique position as a credit card issuer and a network operator. This dual role allows it to capture a larger share of transaction economics, contributing to a more profitable and resilient business model. 

Strong credit performance and operational efficiency remain core drivers of AmEx’s profitability, while rising cardmember spending and expanding lending operations help anchor stability in a shifting economic environment. While many U.S. consumers are feeling the strain of macroeconomic turbulence, AmEx’s premium-focused clientele remains willing to pay for the perks and rewards that come with its high-end credit cards. 

Despite macro uncertainty, American Express remains resilient, with strong travel and entertainment spending, particularly in lodging, dining and experiences. Strategic acquisitions, including Center, Kabbage, Tock and Rooam, have expanded its footprint in premium lifestyle services, high-end dining and small business lending, diversifying revenue and reinforcing its premium value proposition.

Revenues, net of interest expenses, witnessed a three-year CAGR of 15.9% (ended 2024). Additionally, AXP anticipates revenues to increase 8-10% for 2025 from $65.9 billion in 2024.

Nonetheless, despite showing resilience, AmEx’s business model exposes it to credit risk, especially in an economy grappling with inflationary pressures and higher-than-normal interest rates. The lingering macroeconomic headwinds and tariff uncertainties are expected to weigh on this Zacks Rank #3 stock’s financials to some extent.

Fifth Third’s efforts to expand the non-interest income base over the years with the help of strategic partnerships and acquisitions in different industries, such as healthcare (including the acquisition of Coker Capital in 2020 and buyout of Provide in August 2021), will support commercial verticals and result in revenue growth, expense savings and operational excellence.

Fifth Third remains focused on branch optimization to strengthen its footprint in high-growth regions. The bank is actively repositioning its network, expanding in the Southeast while gradually reducing its presence in the Midwest. By 2028, it expects its branch mix to be evenly split between the two regions. To support this strategy, the bank plans to open 50–60 new locations annually across key Southeast markets from 2025 through 2028, adding more than 200 branches over four years. As of June 30, 2025, it operated more than 1,080 branches across 11 states.

The initiative will not only result in incremental deposit growth as new Southeast branches mature, but it will also expand commercial, treasury, wealth and private banking businesses in the new markets. With such efforts, FITB has diversified its revenue base, which will support top-line growth even during economic slowdowns. 

A strong balance sheet and investment-grade long-term credit ratings from leading credit rating agencies are likely to continue supporting the company’s growth. Also, Fifth Third’s sustainable capital deployments reflect a solid liquidity position and will keep enhancing shareholder value.

At present, FITB has a Zacks Rank #3.

Citizens Financial is executing a long-term growth strategy centered on wealth management, high-net-worth capabilities and targeted market expansion. In October 2023, the company launched Citizens Private Bank, a key milestone in strengthening its wealth management franchise. The private bank has been strategically built out, raising $7 billion in deposits through 2024 and reaching profitability by the fourth quarter of that year.

Beyond wealth management, CFG is expanding its New York Metro franchise and deepening its middle-market presence in Florida and California. At the same time, the company continues to invest in its payments platform and reinforce its commercial coverage in the middle market. Together, these efforts complement the success of the private banking business and position the bank for sustainable long-term growth.

Moreover, Citizens Financial’s focus on executing a series of revenue and efficiency initiatives led to the introduction of the “Tapping Our Potential” (TOP) program more than a decade ago. Since then, the TOP programs have helped achieve more than $1.25 billion in pre-tax run rate benefits through 2024. The bank’s TOP 9 program is progressing well and targets a $100 million pre-tax run-rate benefit in 2025. It plans to launch the TOP 10 program, which will focus on automation and improving efficiency and include the use of artificial intelligence in its operations.

The company’s focus on relationship-based lending involves reducing non-core loans through its balance sheet optimization plans. Further, Citizens Financial has been growing via acquisitions. The buyouts have bolstered this Zacks Rank #3 company’s balance sheet, expanded its product and fee-generation capabilities and geographic reach, creating a strong foundation for solid revenue growth.